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Croda (CRDA)

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TheMotorcycleBoy
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Croda (CRDA)

#212171

Postby TheMotorcycleBoy » April 2nd, 2019, 4:24 pm

Apologies if this post is in the wrong board, but it's definitely share news-worthy. I received the following "Corporate Action" notification in my iWeb S&S ISA yesterday:

CRODA INTERNATIONAL PLC - Important Information

Proposed Consolidation.

41 New Croda International PLC (Croda) Ordinary shares for every 42 Existing Ordinary shares held on 29th April 2019, being the Ex-entitlement Date.

And:

Proposed Special Dividend of GBP1.15 per each Existing Croda share held on 29th April 2019, being the Ex-entitlement Date.
In February 2019, Croda announced its intention to pay a Special Dividend of approximately GBP150million, representing GBP1.15 per share.

In conjunction with the proposed Special Dividend, Croda proposes to implement a Consolidation in order to maintain comparability as far as possible, between the Company's share price before and after the payment of the Special Dividend.

The Special Dividend and Consolidation are subject to shareholder approval at the Annual General Meeting to be held on 24th April 2019.

Following such approval, the Consolidation is expected to become effective on 29th April 2019 and the New Croda shares are expected to be credited to your account on or after the same date. Unless you hold your shares in a ShareBuilder account, no fractions of shares will be issued. Any resulting cash entitlements will be dealt with in accordance with our Terms & Conditions.

When a company consolidates its share capital the number of shares in the Company reduces. This will impact the share price as the total value of shares will remain the same but there are fewer shares in circulation, so the price can increase significantly. You may therefore notice an increase in the share price when the Consolidation becomes effective.

If approved by shareholders, the proceeds from the Special Dividend Payment are expected to be credited to your account on or after 30th May 2019. The proceeds will be paid through our usual Dividend procedures.

Should you retain your holding of Croda shares, we will update you in due course upon receipt of any further information from the Company.

Should you wish to find more information about the Special Dividend and Consolidation, please visit https://www.croda.com/en-gb/investors/regulatory-news.


I have followed the link in the above communication, and found nothing of relevance. Could somebody here explain what this is and why it's happening?

I've assumed that this is a "share split", but after googling "croda share split 2019", I'm still none the wiser.

Also given that the proposal is to turn 42 into 41 (higher valued) shares, and I've got only 21 shares, will I likely profit?

thanks Matt

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Re: Croda (CRDA)

#212194

Postby PinkDalek » April 2nd, 2019, 5:33 pm

The relevant RNS is the one entitled Annual Financial Report (dated for 18 March 2019):

Croda International Plc - Annual Financial Report, Notice of Annual General Meeting and details of Special Dividend and Share Consolidation
https://www.investegate.co.uk/croda-int ... 26282153T/

If approved, based on your holding of 21 ordinary shares of nominal value 10.357143 pence each, you should receive a Special Dividend of £24.15 on 30 May 2019 or later depending on how quickly your broker pays across. Plus the ordinary final dividend of 49p per share, which should give you £10.29.

You can find the detailed Resolutions here https://www.croda.com/en-gb/investors/s ... esolutions. If you download the Notice of Meeting you'll find the Appendix of relevance. This includes a table on page 13 which may answer your questions. I haven't studied it!

I reckon you should end up with 20 new ordinary shares of nominal value 10.609756 pence each (in place of your existing 21), plus potentially a small fractional entitlement in cash, payable 17 May 2019 or thereabouts. Edit: Although your broker indicates that they'll keep the fractional entitlement, as many do.

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Re: Croda (CRDA)

#212214

Postby TheMotorcycleBoy » April 2nd, 2019, 6:36 pm

PinkDalek wrote:The relevant RNS is the one entitled Annual Financial Report (dated for 18 March 2019):

Croda International Plc - Annual Financial Report, Notice of Annual General Meeting and details of Special Dividend and Share Consolidation
https://www.investegate.co.uk/croda-int ... 26282153T/

If approved, based on your holding of 21 ordinary shares of nominal value 10.357143 pence each, you should receive a Special Dividend of £24.15 on 30 May 2019 or later depending on how quickly your broker pays across. Plus the ordinary final dividend of 49p per share, which should give you £10.29.

You can find the detailed Resolutions here https://www.croda.com/en-gb/investors/s ... esolutions. If you download the Notice of Meeting you'll find the Appendix of relevance. This includes a table on page 13 which may answer your questions. I haven't studied it!

I reckon you should end up with 20 new ordinary shares of nominal value 10.609756 pence each (in place of your existing 21), plus potentially a small fractional entitlement in cash, payable 17 May 2019 or thereabouts. Edit: Although your broker indicates that they'll keep the fractional entitlement, as many do.

Hi PinkDalek,

Surely the difference (fractional entitlement) is paid in market value? Since I bought them at market value (about £47 per share back in Dec 2018).

So since they are now priced by the market at about £50/share, then were they to be split now at todays market price, (41 from 42), then using that £50 as a rough guide, I calculated that the new price would be

41 * x = 42 * 50
x = 51.21

so the difference for me:

21 * 50 = 1050
20 * 51.21 = 1024.20
= 25.80

Therefore presumably the difference payable to me, in terms of this split, would be roughly £25.80. Isn't that it? For them do anything else (i.e. use the nominal price) seems really unfair, since it is 500* less than the current market one.

I did ring IWeb, but the phone assistant was clueless and I had to drip feed him before he said he'd have to take advice. After a lengthy delay he returned saying "you will receive a some money credited into your account, as long as the difference is more than £3".

Matt

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Re: Croda (CRDA)

#212226

Postby TheMotorcycleBoy » April 2nd, 2019, 7:07 pm

PinkDalek wrote:If approved, based on your holding of 21 ordinary shares of nominal value 10.357143 pence each, you should receive a Special Dividend of £24.15 on 30 May 2019 or later depending on how quickly your broker pays across. Plus the ordinary final dividend of 49p per share, which should give you £10.29.

You can find the detailed Resolutions here https://www.croda.com/en-gb/investors/s ... esolutions. If you download the Notice of Meeting you'll find the Appendix of relevance. This includes a table on page 13 which may answer your questions. I haven't studied it!

I reckon you should end up with 20 new ordinary shares of nominal value 10.609756 pence each (in place of your existing 21), plus potentially a small fractional entitlement in cash, payable 17 May 2019 or thereabouts. Edit: Although your broker indicates that they'll keep the fractional entitlement, as many do.

Hmmm.... by a strange coincidence the special dividend payment for me (1.15 x 21 = 24.15) is very similar to the amount which I think I'll lose if my holding changes from 21 shares at the old price to 20 at the new price (25.80)

I'm missing something here, surely I must be recompensed at the market value since as this extract from my communication with IWeb states;

When a company consolidates its share capital the number of shares in the Company reduces. This will impact the share price as the total value of shares will remain the same but there are fewer shares in circulation, so the price can increase significantly. You may therefore notice an increase in the share price when the Consolidation becomes effective.


the market price of the new share will be more than that of the old. So holders with exact multiples of 42 shares we have the same the capital value after the share split and the special dividend. Whereas those with an incongruent number will (unless the fractional entitlement is in market value) lose capital.

Matt

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Re: Croda (CRDA)

#212344

Postby PinkDalek » April 3rd, 2019, 11:19 am

Matt wrote:the market price of the new share will be more than that of the old.


From the Resolution (as against the generic broker narrative):

It is anticipated, therefore, that, absent any market movements, the market price of each ordinary share should remain at a broadly similar level following the special dividend and the share consolidation.

Also Fractions of New Ordinary Shares will not be allotted to shareholders; instead the shares representing the fractions of New Ordinary Shares will be aggregated and sold for the best price reasonably obtainable on behalf of the shareholders entitled to the fractions as soon as practicable after the share consolidation. The net proceeds of the sale, after the deduction of the expenses of the sale, will be distributed in due proportion among the relevant shareholders.

They aren't using nominal value as you put it. That part is a red herring. They'll be selling the aggregated fractions, most likely in the market, at market price.

Subject to the expenses of the sale (which'll be well spread amongst those entitled to the fractions) you should be nearly in the same position as before, though with some cash in your pocket.

Edit: I think your fraction is 0.5000 (21*41/42)-(20) worth about £25.

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Re: Croda (CRDA)

#212392

Postby TheMotorcycleBoy » April 3rd, 2019, 2:08 pm

PinkDalek wrote:
Matt wrote:the market price of the new share will be more than that of the old.


From the Resolution (as against the generic broker narrative):

It is anticipated, therefore, that, absent any market movements, the market price of each ordinary share should remain at a broadly similar level following the special dividend and the share consolidation.

Also Fractions of New Ordinary Shares will not be allotted to shareholders; instead the shares representing the fractions of New Ordinary Shares will be aggregated and sold for the best price reasonably obtainable on behalf of the shareholders entitled to the fractions as soon as practicable after the share consolidation. The net proceeds of the sale, after the deduction of the expenses of the sale, will be distributed in due proportion among the relevant shareholders.

They aren't using nominal value as you put it. That part is a red herring. They'll be selling the aggregated fractions, most likely in the market, at market price.

Subject to the expenses of the sale (which'll be well spread amongst those entitled to the fractions) you should be nearly in the same position as before, though with some cash in your pocket.

Edit: I think your fraction is 0.5000 (21*41/42)-(20) worth about £25.

Thanks, PD, that's about what my above estimate told me.
Matt

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Re: Croda (CRDA)

#212467

Postby fisher » April 3rd, 2019, 6:34 pm

The way it will work for you will be:

21 existing shares.
21 *41/42 = 20.5 new shares.

This rounds down to 20 new shares which is what you'll own on (29/04/19) after the consolidation.
You get a dividend of £1.15 on the original 21 shares = £24.15 (paid 30/05/2019)

As you hold through IWeb it is up to them what they do with your 0.5 of shares that cannot be allocated for you. They will probably have a number of clients holding CRDA so they will receive shares from the consolidation on the total number held across all clients. They then apportion what they've received and allocate to you based on 41/42. So they will have some shares left over. They then either keep these for themselves or the sell them in the market and apportion the proceeds across all their CRDA holding customers pro rata. The way they do this will be laid out in their terms and conditions.

So your extra half a share (worth about £25 at today's valuation) may end up being credited to you later on if they sell the fractional shares and give the proceeds to their clients who hold. Alternatively, they may just keep your £25 if their T&Cs say that they keep all the fractional share entitlements.

It looks like the valuation that CRDA used was for a share price of £48.30 when they originally worked all of this out. At £48.30, the difference on a share between its value and 41/42 of it's value is the £1.15 dividend (i.e. 1 * 48.30 * 1 /42 = 1.15). Because the share price is currently above this £48.30 the new shares should trade higher than the current share price of £50.60 as long as the current share price being above £48.30 continues until 29/04/2019.

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Re: Croda (CRDA)

#212478

Postby TheMotorcycleBoy » April 3rd, 2019, 7:24 pm

fisher wrote:The way it will work for you will be:

21 existing shares.
21 *41/42 = 20.5 new shares.

This rounds down to 20 new shares which is what you'll own on (29/04/19) after the consolidation.
You get a dividend of £1.15 on the original 21 shares = £24.15 (paid 30/05/2019)

As you hold through IWeb it is up to them what they do with your 0.5 of shares that cannot be allocated for you. They will probably have a number of clients holding CRDA so they will receive shares from the consolidation on the total number held across all clients. They then apportion what they've received and allocate to you based on 41/42. So they will have some shares left over. They then either keep these for themselves or the sell them in the market and apportion the proceeds across all their CRDA holding customers pro rata. The way they do this will be laid out in their terms and conditions.

So your extra half a share (worth about £25 at today's valuation) may end up being credited to you later on if they sell the fractional shares and give the proceeds to their clients who hold. Alternatively, they may just keep your £25 if their T&Cs say that they keep all the fractional share entitlements.

It looks like the valuation that CRDA used was for a share price of £48.30 when they originally worked all of this out. At £48.30, the difference on a share between its value and 41/42 of it's value is the £1.15 dividend (i.e. 1 * 48.30 * 1 /42 = 1.15). Because the share price is currently above this £48.30 the new shares should trade higher than the current share price of £50.60 as long as the current share price being above £48.30 continues until 29/04/2019.

The IWeb rep I spoke with said that if the fractional amount is over £3 then it will be credited my way.

What I can't get my head around is why CRDA decided to do this. Seems both pointless and a really weird ratio, but having said that I've only been private investing since last March so still have lots to learn.

Matt

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Re: Croda (CRDA)

#212484

Postby fisher » April 3rd, 2019, 8:01 pm

It's a way of them issuing a special dividend without the associated drop in the share price. I don't know what prompted them to issue a special dividend. Perhaps surplus cash and/or pressure from some larger shareholders to release some value in cash for them.

The share consolidation attempts to ensure the share price doesn't drop much - if at all. I'm guessing that some of the staff or directors' bonuses are related to the share price and so they don't want it to drop because of a special dividend.

It's a common way of returning capital to shareholders.

In my records I record it as an enforced sale of the shares I will lose at £48.30 which then credits me with the "sale proceeds" - exactly the same amount as is paid in special dividend.

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Re: Croda (CRDA)

#212486

Postby fisher » April 3rd, 2019, 8:09 pm

The ratio they use will have been calculated based on the share price at the time and the amount per share they were intending to return.

Share price is 48.30
Div per share to pay = 1.15
Value of share after div paid = 48.30 - 1.15 = 47.15

47.15 to 48.30 is the same ratio as 41 to 42

Something along those lines.

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Re: Croda (CRDA)

#212537

Postby Pendrainllwyn » April 4th, 2019, 5:48 am

This is nothing but a dirty trick on people like me who buy in round numbers of shares! I will now have to buy a few more to keep my mild OCD under control.

fisher wrote:It's a way of them issuing a special dividend without the associated drop in the share price.
I expect this is correct. I would rather the Directors focused on running the business and avoid the costs of this exercise. But to be fair they have been doing a great job of late and I am happy to continue to hold one of my bigger positions.

Pendrainllwyn

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Re: Croda (CRDA)

#212538

Postby TheMotorcycleBoy » April 4th, 2019, 5:51 am

Pendrainllwyn wrote:This is nothing but a dirty trick on people like me who buy in round numbers of shares! I will now have to buy a few more to keep my mild OCD under control.

fisher wrote:It's a way of them issuing a special dividend without the associated drop in the share price.
I expect this is correct. I would rather the Directors focused on running the business and avoid the costs of this exercise. But to be fair they have been doing a great job of late and I am happy to continue to hold one of my bigger positions.

Pendrainllwyn

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Re: Croda (CRDA)

#212539

Postby TheMotorcycleBoy » April 4th, 2019, 5:56 am

TheMotorcycleBoy wrote:
Pendrainllwyn wrote:This is nothing but a dirty trick on people like me who buy in round numbers of shares! I will now have to buy a few more to keep my mild OCD under control.

fisher wrote:It's a way of them issuing a special dividend without the associated drop in the share price.
I expect this is correct. I would rather the Directors focused on running the business and avoid the costs of this exercise. But to be fair they have been doing a great job of late and I am happy to continue to hold one of my bigger positions.

Pendrainllwyn

Yes, I am a previous sufferer myself, and I'm having exactly the same thoughts!!
That is buy another 21 shares to bring up my total to 42 and those not lose any CRDA. Perhaps that is their (crda's) plan too.

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Re: Croda (CRDA)

#212540

Postby TheMotorcycleBoy » April 4th, 2019, 6:00 am

The share consolidation move does also seem like a way of orchestrating a share buyback, since those with incongruent holdings are getting capital return at today's price. Inconvenient for us trying to build, mind you.

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Re: Croda (CRDA)

#212603

Postby Gengulphus » April 4th, 2019, 10:58 am

If you actually want full details of the special dividend and share consolidation, the document you need is their AGM notice, which is downloadable here - they're in the Appendix to the document, which starts on page 12.

Essentially, assuming they pass their shareholder vote on April 24th (which is pretty certain - I don't remember ever seeing a 'pay shareholders' resolution voted down!) the shares go 'ex' the special dividend and are consolidated over the weekend of April 27th/28th. At that point, you become entitled to the special dividend of 21 * 115p = £24.15, but the shareholding you're entitled to gets reduced from 21 Existing Ordinary Shares to 41/42 * 21 = 20.5 New Ordinary Shares in the first place. (The nominal value of the new shares is adjusted upwards by a factor of 42/41, so their total nominal value remains unchanged - but the nominal value of shares is basically a company law / accounting technicality, and very seldom of any real interest to shareholders.)

There is however the issue that company law basically says that shares may only come in whole numbers, not fractions. If your shares were held directly as a shareholding registered with the company, with the share register being maintained by the company's registrars, then the company has to resolve that. And there's a very standard way that companies do that: your entitlement is 20.5 New Ordinary Shares, you actually receive 20 New Ordinary Shares and you have a 'fractional entitlement' of 0.5 New Ordinary Shares. Unable to distribute the fractional entitlements because of the whole-shares-only rule, the company amalgamates all the fractional entitlements of the registered shareholdings and sells the resulting shares on the market. It then distributes the proceeds of that sale (net of selling costs) to the owners of the fractional entitlements in proportion to their fractional entitlements - though there's usually something buried in the fine print saying that if a shareholder's fractional entitlement payment is less than a certain amount (£5 is common), it won't be sent to them, but instead either retained for the benefit of the company or donated to charity.

In this case, resolution 20 (on page 6 of the link) contains the wording specifying that, and page 13 of the link says it again and gives a table of roughly how some shareholding sizes are expected to be treated (it can't be exact because the fractional entitlement payments depend on the price achieved by the sale. It doesn't seem to say anything about minimal payment amounts - that's definitely unusual, but Croda's high share price means that few fractional entitlements will be below £5, and so they might be reckoning that having an acceptably small minimum payment amount would save too little in admin costs to be worth the extra complexity, or they might just reckon that as a matter of principle, shareholders' entitlements shouldn't be confiscated.

So if you held your 21 shares as a registered shareholding (which means if you held them as a share certificate or in a CREST account), you would expect to receive 20 new shares plus a bit less than half the share price as a fractional entitlement payment. But I think from your mention of iWeb as your broker that you hold them in a nominee account, as I'm fairly certain that iWeb don't offer CREST accounts, and brokers don't remain 'attached' to certificated holdings that they've bought for you. And that complicates things, because iWeb's nominee company will be the registered shareholder for your shares, holding them along with all other Croda shareholdings owned by their nominee account clients as a single combined registered shareholding, and unfortunately the sort of thing I've described above has the property that the whole is slightly different from the sum of the parts: if for instance you had a shareholding of 21 shares held with iWeb and I also had a shareholding of 21 shares held with them, and no-one else held Croda shares with iWeb (most unlikely, of course, but to keep the example simple), then we would each be expecting to receive 20 shares and just under half the share price in cash - but their nominee company's registered holding would be 42 shares and so become 41 shares and no fractional entitlement cash, so up by 1 share and down by just under the share price on what it needs.

Nominee brokers vary with regard to how they deal with that situation, and it's even possible for them to vary with regard to which type of account the shares are held in. There are numerous possible solutions, such as:

1) Not making the fractional entitlement payments at all - essentially taking any fractional entitlement payments that would have been due as an extra, rather hidden fee. (Or to be precise, taking any surplus shares they end up with plus the fractional entitlement payment they receive from the company as that fee.)

2a) Sell any surplus shares they end up with, add the proceeds minus the selling costs to the fractional entitlement payment they receive, and distribute the resulting cash to their customers in proportion to their fractional entitlements.

2b) As 2a), except with a minimum payment (which might differ from that chosen by the company, if any) and them keeping payments that would be less than it for themselves.

2c) As 2a), except make payments to their customers that match what the company would have paid to registered shareholders with the same sizes of shareholding. Absorb any deficit of the cash they actually received from the share sale and as a fractional entitlement payment as extra operating costs, or if there's a surplus instead, take it as extra operating profits.

3) Do their internal accounting for customers' shareholdings in a way that does allow fractional shares. E.g. in the example above, they just have their internal accounting say that each of you and I own 20.5 out of the 41 shares in their registered shareholding (*). On the assumption that it is a rebadged version of the Halifax ShareBuilder account, this is the solution they use for their ShareBuilder account, which accounts for shareholdings in units of a millionth of a share. So for Croda's ~£50 shares, for instance, the accounting errors are of the order of 0.000001 * £50, or about 1/200th of a penny - very negligible!

The way to find out which of these and others your account uses is to check its terms & conditions - there will probably be something deeply buried in them about how they deal with receipts from corporate actions that they cannot divide equitably between their customers.

Finally (apart from the footnote below), I should say that the RNS PinkDalek links to says "The proposed share consolidation is intended to maintain comparability, as far as possible, of the Company's share price before and after the special dividend by reducing the number of Existing Ordinary Shares in issue by approximately the same percentage". I.e. you shouldn't expect the share price to change much more between Friday April 26th and Monday April 29th than it does over a normal weekend, and so you should expect the value of your holding to fall by the share price over that weekend. If your shareholding were registered, you would receive cash of £24.15 as the special dividend and a bit under half the share price as a fractional entitlement payment, which it won't escape your notice is little different from the amount your holding's value can be expected to fall. So you might wonder (and do, I think, judging by your comments in the long period while this post has been sitting around not quite finished on my machine!) what the point of the whole exercise is!

But actually, you might wonder the same about any dividend payment - the share price is normally expected to fall by about the amount of the dividend as it goes ex-dividend, and so it displays the same characteristic of an expected holding value fall roughly matching a cash gain (the only difference is that with this, the holding value falls because the number of shares falls, and with a normal dividend, it falls because the share price falls). And the answer in both cases is the same: the point is to get cash that is surplus to the company's requirements into the hands of shareholders, for them to individually decide how to use it. The actual mechanics of how a cash payment is made to shareholders are basically never expected to increase shareholder value (the market might decide to increase the share price, but if the market expects a payment that is coming up to increase shareholder value, it will have raised the share price when the payment was announced and not have waited until it was actually being made!). Indeed, the actual mechanics of making a payment to shareholders always involve some extra admin costs for the company and so very slightly decrease shareholder value.

So if you want to see a company increasing shareholder value, look at what it does between payments to shareholders, not what happens as part of making the payments.

(*) The problem with this solution is what happens when either of us wants to sell our 20.5 shares, and I believe their solution to that is basically that their accounting includes holding a fraction of a share themselves. So their accounting says that their 41 shares are held 20.500000 by you, 20.500000 by me and 0.000000 by themselves. When I sell my 20.5 shares, they might sell 20 shares and still hold 21 (split as 20.500000 by you and 0.500000 by themselves), and account to me on the basis that they've sold 20 of the shares I'm selling on the market and bought the remaining 0.5 shares from me themselves at the same price. Or they might sell 21 shares and still hold 20 (split as 20.500000 by you and -0.500000 by themselves), and account to me on the basis that they've sold all 20.5 of the shares I'm selling and short-sold another 0.500000 shares themselves on the market at the same price. That's a system they primarily have (both for purchases and sales) for the ShareBuilder account's intended market: customers who want to invest a small amount per month and not have to worry e.g. about the fact that £100/month isn't quite enough to buy 2 Croda shares. But it is also a rather convenient solution for corporate actions like this one.

Gengulphus

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Re: Croda (CRDA)

#212849

Postby TheMotorcycleBoy » April 5th, 2019, 8:15 am

Hi Geng,

Firstly I want to say many thanks for taking the time to write all this up. It must have taken you a while, and I greatly appreciate your efforts.

Gengulphus wrote:If you actually want full details of the special dividend and share consolidation, the document you need is their AGM notice, which is downloadable here - they're in the Appendix to the document, which starts on page 12.

Yes, I've just read this section:

The Board considers returning excess capital to shareholders when leverage falls below the Company’s target
range of 1.0 to 1.5x (excluding retirement benefit schemes) and sufficient capital is available to meet our investment
opportunities. As leverage at the end of 2018 was close to 1x and given the Board’s confidence in future cash
generation, the Board is proposing the special dividend at this year’s AGM. The effect of this return of capital, had it
been made in 2018, would have been to increase the 2018 year end leverage towards the upper end of the Board’s
target range.


So as a shareholder I am reassured that CRDA are using a sensible and clear criteria for handing out specials.

Gengulphus wrote:There is however the issue that company law basically says that shares may only come in whole numbers, not fractions. If your shares were held directly as a shareholding registered with the company, with the share register being maintained by the company's registrars, then the company has to resolve that. And there's a very standard way that companies do that: your entitlement is 20.5 New Ordinary Shares, you actually receive 20 New Ordinary Shares and you have a 'fractional entitlement' of 0.5 New Ordinary Shares. Unable to distribute the fractional entitlements because of the whole-shares-only rule, the company amalgamates all the fractional entitlements of the registered shareholdings and sells the resulting shares on the market. It then distributes the proceeds of that sale (net of selling costs) to the owners of the fractional entitlements in proportion to their fractional entitlements - though there's usually something buried in the fine print saying that if a shareholder's fractional entitlement payment is less than a certain amount (£5 is common), it won't be sent to them, but instead either retained for the benefit of the company or donated to charity.

Indeed, thanks.

2a) Sell any surplus shares they end up with, add the proceeds minus the selling costs to the fractional entitlement payment they receive, and distribute the resulting cash to their customers in proportion to their fractional entitlements.

2b) As 2a), except with a minimum payment (which might differ from that chosen by the company, if any) and them keeping payments that would be less than it for themselves.

Yes, I believe that this is how IWeb will play things. I believe in this case that the minimum payment is £3.

Gengulphus wrote:Finally (apart from the footnote below), I should say that the RNS PinkDalek links to says "The proposed share consolidation is intended to maintain comparability, as far as possible, of the Company's share price before and after the special dividend by reducing the number of Existing Ordinary Shares in issue by approximately the same percentage". I.e. you shouldn't expect the share price to change much more between Friday April 26th and Monday April 29th than it does over a normal weekend, and so you should expect the value of your holding to fall by the share price over that weekend. If your shareholding were registered, you would receive cash of £24.15 as the special dividend and a bit under half the share price as a fractional entitlement payment, which it won't escape your notice is little different from the amount your holding's value can be expected to fall. So you might wonder (and do, I think, judging by your comments in the long period while this post has been sitting around not quite finished on my machine!) what the point of the whole exercise is!

But actually, you might wonder the same about any dividend payment - the share price is normally expected to fall by about the amount of the dividend as it goes ex-dividend, and so it displays the same characteristic of an expected holding value fall roughly matching a cash gain (the only difference is that with this, the holding value falls because the number of shares falls, and with a normal dividend, it falls because the share price falls). And the answer in both cases is the same: the point is to get cash that is surplus to the company's requirements into the hands of shareholders, for them to individually decide how to use it. The actual mechanics of how a cash payment is made to shareholders are basically never expected to increase shareholder value (the market might decide to increase the share price, but if the market expects a payment that is coming up to increase shareholder value, it will have raised the share price when the payment was announced and not have waited until it was actually being made!). Indeed, the actual mechanics of making a payment to shareholders always involve some extra admin costs for the company and so very slightly decrease shareholder value.

Hmm... So perhaps you and PinkDalek are in agreement with me? That is the share/split is merely a technique to get a special out, but avoid the attendant blip in the SP. This actually narks me somewhat, since prices go up and down all the time and furthermore, for me I will get about 2.5% of my holding converted from shares (which I feel I got at a nice price, back in the autum dip) into cash. I'd rather just get the special!

Gengulphus wrote:So if you want to see a company increasing shareholder value, look at what it does between payments to shareholders, not what happens as part of making the payments.

Yes, sure. And yes, I'm happy that they are increasing shareholder value in between.

thanks again,
Matt

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Re: Croda (CRDA)

#213166

Postby Gengulphus » April 6th, 2019, 5:00 pm

TheMotorcycleBoy wrote:Hmm... So perhaps you and PinkDalek are in agreement with me? That is the share/split is merely a technique to get a special out, but avoid the attendant blip in the SP. This actually narks me somewhat, since prices go up and down all the time and furthermore, for me I will get about 2.5% of my holding converted from shares (which I feel I got at a nice price, back in the autum dip) into cash. I'd rather just get the special!

Yes, I would be a bit narked too if I owned the shares. I can see the point of accompanying a one-off cash return with a consolidation when the ex-return drop is going to be significant enough to 'frighten the horses' - e.g. to stand out prominently in share price charts for many years to come, and so giving naïve (or lazy) investors who don't check up on just what was going on the impression that the company is (or might well be) accident-prone. But in this case it was going to be under 2.5%, which simply isn't going to stand out against the normal market 'noise' on anything other than a very short-term chart - it might affect investors' decisions for a few days or possibly weeks to come, but that's it. IMHO that simply isn't worth the extra admin and professional advisers' fees the consolidation imposes on the company and the extra admin it imposes on the company's shareholders.

Gengulphus

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Re: Croda (CRDA)

#214214

Postby TheMotorcycleBoy » April 10th, 2019, 6:37 pm

For the last 15 minutes of the LSE trading hours of today (10/04/2019) the shares traded in a Closing Auction Call.

Matt

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Re: Croda (CRDA)

#430649

Postby 77ss » July 27th, 2021, 8:59 am

One of my more recent acquisitions.

Interims released today:

https://www.investegate.co.uk/croda-int ... 00055242G/

They read well to me. Divi up 10% too (small beer compared to capital growth perhaps, but a wecome indicator). Recent acquisitions seem to be paying off.

Mr Market approves, with the SP up 3.5% as I type.

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Re: Croda (CRDA)

#430684

Postby Pendrainllwyn » July 27th, 2021, 11:16 am

Croda seems to be making a success of its push into higher margin growth businesses. It's not as cheap as it was but all seems to be going well for now so I am holding tight.

Pendrainllwyn


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